Here’s my take on Mira Mesa and surrounding areas. In short, I think Mira Mesa experienced the majority of its declines already. We’re talking about ~40% off from peak. The question is will we see 45% off peak to trough or 60% and how the remaining 5-15% will play out. We can very well go into a soft landing from here and let inflation eat away the other 5-15%. Right now, mortgage is quite similar to rent, even w/ 0% down. With 20% down, you’re well under the rental rate of the area. If the buying demand doesn’t die down in 3rd and 4th Q, we might be forming a bottom.
Regarding surrounding areas, like PQ, they didn’t rise as much as MM, but they haven’t fallen as badly as MM either. Based on rent, mortgage is still well above rental price. So if we see rent as a fundamental that we must return to, then these areas still have much further to fall than MM.
The lending standard and requirement of 10-20% down will force a contraction of price as well, just like how it was 10-15 years ago. The priced difference between 1300 sq-ft house in MM, and 1800 sq-ft house in PQ wasn’t that huge, probably around 20%. Right now, the gap is more like 40%. Same with Carmel Valley, in 1998, a 1500 sq-ft house in MM, was around $160k while a 2000 sq-ft house in CV was around $260k, which was a 60% premium. The same 1500 sq-ft house in MM right now have fallen back to around $350k. Add that 60% premium will put the price @ ~$560k. However, they’re listing around $700-$750k right now. Even if MM house doesn’t fall anymore, CV is still 20-25% away from that 60% premium. Like Rustico said, it’s much easier to come up w/ 20% down on a $350k house than $560k house.
